iDreamSky Technology Holdings Limited (SEHK:1119) and CVC Capital Partners Limited are considering reducing their offer to jointly acquire Leyou Technologies Holdings Limited (SEHK:1089) according to people familiar with the matter. The suitors are seeking to significantly cut from a previous offer that would have valued Leyou at about $1.4 billion, the people said. Market volatility and tighter funding conditions due to the coronavirus outbreak are among the reasons, said the people, asking not to be identified because the matter is private.

The consortium, which is lining up financing from banks, is in advanced discussions with Leyou's shareholders on the new offer, the people said. The companies may not be able to reach an agreement as talks could still fall apart, they said. A representative for iDreamSky said the company will provide the latest progress of the acquisition via the Hong Kong stock exchange website, while a representative for CVC declined to comment.

A representative for Leyou didn't immediately respond to requests for comment.